ALLIED CORPORATION, PETITIONER V. UNITED STATES INTERNATIONAL TRADE
COMMISSION, ET AL.
No. 88-747
In The Supreme Court Of The United States
October Term, 1988
On Petition For A Writ Of Certiorari To The United States Court Of
Appeals For The Federal Circuit
Brief For The Federal Respondent In Opposition
TABLE OF CONTENTS
Questions presented
Opinions below
Jurisdiction
Statement
Argument
Conclusion
OPINIONS BELOW
The opinion of the court of appeals (Pet. App. A1-A19) is reported
at 850 F.2d 1573. The opinions of the United States International
Trade Commission and the administrative law judge are unofficially
reported at U.S.I.T.C. Pub. Nos. 2035 and 2036. Excerpts from these
opinions are reprinted in the appendix to the petition (Pet. App.
A37-A39).
JURISDICTION
The judgment of the court of appeals was entered on June 29, 1988.
A petition for rehearing and a suggestion for rehearing en banc were
denied, respectively, on August 1, 1988, and August 23, 1988 (Pet.
App. A20, A21). On August 25, 1988, upon reconsideration of the
petition for rehearing, the court of appeals granted the petition and
modified the court's opinion in certain respects (id. at A22). The
petition for a writ of certiorari was filed on October 31, 1988. The
jurisdiction of this Court is invoked under 28 U.S.C. 1254(1).
QUESTIONS PRESENTED
1. Whether petitioner was correctly held to have abandoned any
objections to the International Trade Commission's interpretation of
the scope of petitioner's patent when petitioner failed to assert an
objection to that interpretation in the manner required by the ITC's
rules and defended that interpretation when opposing efforts by its
opponents to have the patent declared invalid.
2. Whether the court of appeals' refusal to review the ITC's
interpretation of petitioner's patent under those circumstances denied
petitioner due process of law.
STATEMENT
1. Petitioner, an American corporation, holds a process patent (No.
4,221,257) covering "Continuous Casting Methods for Amorphous Metal
Strips" ("the '257 patent"). Pet. App. A27. In 1983, acting on
petitioner's complaint, the United States International Trade
Commission (the "Commission" or "ITC") commenced proceedings under
Section 337 of the Tariff Act of 1930, 19 U.S.C. 1337, to determine
whether the processes used to make certain imported steel products
were covered by the '257 patent. /1/ Among others, respondents
Hitachi Metals, Ltd., Vacuumschmelze GmbH, Nippon Steel Corporation,
and Siemens Capital Corporation (collectively "the corporate
respondents") were made parties to these proceedings.
The matter was referred to an administrative law judge for an
evidentiary hearing. In her initial determination, issued in May
1984, the ALJ concluded that the claims /2/ of the '257 patent would
be invalid -- either because they would be insufficiently specific or
because the invention described would be obvious in view of existing
technology (35 U.S.C. 112, 103) -- unless dimensions of the nozzle
lips of the device used in the process, which were set out in the
specification included in petitioner's patent, were incorporated into
those claims. Pet. App. A48-A51. The ALJ ruled, however, that
petitioner's patent claims could be interpreted to include those
dimensions in order to clarify the claims' ambiguity and to avoid a
finding of obviousness (id. at A48, A49). On this basis, the ALJ held
that the patent was not invalid (ibid.). The ALJ further found that
the corporate respondents had violated Section 337 by importing
articles manufactured through processes that were within the scope of
petitioner's patent claims, as interpreted (see Pet. App. A24).
Under the ITC's rules, all parties were entitled to petition the
Commission for review of the ALJ's initial determination. 19 C.F.R.
210.54. The Commission's rules require each party seeking such review
to file a petition, which must "(s)pecify the issues upon which review
of the initial determination is sought * * *." 19 C.F.R.
210.54(a)(1)(ii). Those rules also provide that a party will be
deemed to have abandoned any issue that it fails to include in its
petition (19 C.F.R. 210.54(a)(2)):
Any issue not raised in the petition for review filed
pursuant to this rule will be deemed to have been abandoned and
may be disregarded by the Commission in reviewing an initial
determination.
The corporate respondents filed a petition for review, contending
that the ALJ had erred by reading the dimensions of the nozzle lips
into the '257 patent claims in order to preserve the patent's
validity. They argued that the Commission should reverse this aspect
of the initial determination and declare the patent invalid. C.A.
Confidential App. 10111-10113. Although it filed a petition for
review, petitioner did not ask the Commission to review those features
of the ALJ's interpretation of the '257 patent that it challenges now
or her ruling that, without clarification of the dimensions of the
nozzle lips, the patent would be invalid. Further, when petitioner
responded to the corporate respondents' petition for review, it
defended the ALJ's construction of the patent as correct. Pet. App.
A5-A6. /3/
On this record, the ITC refused to review the ALJ's initial
decision, thereby allowing it to become the Commission's determination
(Pet. App. A6; see 19 C.F.R. 210.54(h)). After briefing on the
appropriate remedy, the Commission issued its Amorphous Metal
Exclusion Order, which barred importation of articles manufactured
abroad in accordance with the process described in the '257 patent
(Pet. App. A6). /4/
2. In 1985, certain of the corporate respondents applied to the
Commission for an advisory opinion that importation of amorphous
metals they were producing through new processes would not violate the
Commission's exclusion order or Section 337. The ITC agreed to hear
this application and sua sponte commenced proceedings to determine
whether the prior exclusion order should be modified. During
proceedings before the ALJ to whom these matters were referred,
petitioner agreed not to relitigate the issue of the interpretation of
the '257 patent claims (Pet. App. A33). On March 3, 1986, the ALJ
issued an initial advisory opinion and a recommended determination
with respect to modification of the ITC's prior exclusion order. The
ALJ ruled that the corporate respondents' new processes did not
infringe the '257 patent claims as they had been previously construed
and, accordingly, recommended modification of the exclusion order to
permit importation of respondents' products (id. at A7).
Petitioner filed a petition for review of the ALJ's determinations.
For the first time, petitioner argued that the Commission had erred
in 1984 by construing the scope of the '257 patent too narrowly and by
holding that, without the clarification provided by the dimensions of
the nozzle lips, the patent would be invalid. See Pet. App. A31-A32.
In an advisory opinion issued in May 1987, the ITC rejected
petitioner's arguments on the merits (Pet. App. A23-A35). The
Commission ruled that, under the doctrine of law of the case,
petitioner was bound by the ITC's prior determination of the scope of
the '257 patent claims (id. at A32-A33). The ITC also relied on the
fact that petitioner had agreed not to relitigate the issue of the
interpretation of its patent in the advisory opinion proceedings (id.
at A33). The Commission found that, because the corporate
respondents' new processes used devices with lips whose dimensions
were smaller than those previously read into the '257 patent, articles
produced with those processes were outside the scope of the patent.
See id. at A35. In a parallel order issued in June 1987, the
Commission modified its 1985 Amorphous Metal Exclusion Order, inter
alia, to incorporate the limitations on the dimensions of the nozzle
lips which had earlier been read into the '257 patent (id. at A8-A9).
3. Petitioner appealed from the Commission's May 1987 advisory
opinion and June 1987 modified exclusion order. After holding that it
had jurisdiction to review only the latter order (Pet. App. A10-A16),
the court of appeals held that petitioner had abandoned the arguments
that the Commission had misconstrued the scope of the '257 patent or
erred in holding that the patent was invalid unless clarified in terms
of the dimensions of the nozzle lips. /5/ The court explained that
petitioner had failed to raise those contentions in its petition for
review of the ALJ's 1984 initial determinations on the scope and
validity of the '257 patent, that under the ITC's rule (19 C.F.R.
210.54(a)(2)) those arguments had thereby been abandoned, and that
Allied had affirmatively stated that the ALJ's 1984 construction of
the patent was correct (Pet. App. A16-A17). The court of appeals
described as "disingenuous" petitioner's argument that the ITC's 1987
construction of the patent was different from its 1984 construction
(id. at A17). The court found that "the 1984 and 1987 claim
constructions are the same, that in 1987 being merely the listing of
the actual parameters referred to in 1984 as being found in the
specification" (ibid.).
ARGUMENT
The decision of the court of appeals is correct and is not in
conflict with any decision of this Court or any other court of
appeals. Accordingly, review by this Court is not warranted.
1. In 1984, an ALJ saved petitioner's patent from a determination
that it was indefinite or obvious by incorporating within the patent
claims a description of the patented process found elsewhere in the
patent specification. Though petitioner filed a petition for review
challenging other aspects of the ALJ's determination, its petition did
not question the ALJ's interpretation of the scope of the '257 patent
or her finding that, without clarification, the patent claims would be
invalid. Under the express terms of the ITC's rules, by failing to
raise those issues at that time petitioner must be deemed to have
abandoned them. 19 C.F.R. 210.54(a)(2). Further, when the ALJ's
determinations on these issues became final by virtue of the
Commission's decision not to review them, they became the "law of the
case," binding on petitioner in future proceedings arising from the
Commission's exclusion order.
The court of appeals' refusal to reopen the issues of the scope and
validity of petitioner's patent was in accordance with
well-established legal principles. As this Court stated in United
States v. L.A. Tucker Truck Lines, Inc., 344 U.S. 33, 36-37 (1952)
(footnotes omitted):
We have recognized in more than a few decisions, and Congress
has recognized in more than a few statutes, that orderly
procedure and good administration require that objections to the
proceedings of an administrative agency be made while it has
opportunity for correction in order to raise issues reviewable
by the courts. * * * Simple fairness to those who are engaged
in the tasks of administration, and to litigants, requires as a
general rule that courts should not topple over administrative
decisions unless the administrative body not only has erred but
has erred against objection made at the time appropriate under
its practice.
See also Unemployment Compensation Commission v. Aragon, 329 U.S.
143, 155 (1946). If these principles are to have any meaning, an
agency must be empowered to adopt rules that prescribe how and when a
claim must be presented and to foreclose contentions, like
petitioner's which are not timely raised.
In an effort to avoid the application of these well-established
principles, petitioner contends that the 1987 construction of its
patent, from which the present appeal was taken, was different from
the 1984 interpretation that it failed to challenge before the
Commission. Pet. 7, 8. However, the court of appeals properly
rejected this contention, describing it as "disingenuous" (Pet. App.
A17). In both its 1984 and 1987 determinations, the ITC expressly
limited the scope of petitioner's patent by reference to the
dimensions of the nozzle lips set forth in petitioner's patent
application (compare id. at A45, A48 with id. at A34-A35). Thus, the
court of appeals correctly determined that "the 1984 and 1987 claim
constructions are the same" (id. at A17).
There is also no merit to petitioner's argument that it should have
been allowed to obtain review of issues that the corporate respondents
placed before the Commission in the 1984 proceedings. Pet. 5, 7. At
that time, those respondents argued, in essence, that the ALJ had
erred in saving petitioner's '257 patent by incorporating the
dimensions of the nozzle lips into the patent claims. Petitioner's
present position is the antithesis of that argument: It contends that
the ALJ erred by failing to uphold the validity of the '257 patent as
to a broader range of processes. The contentions advanced by the
corporate respondents in 1984 did not give the Commission any occasion
to consider the arguments petitioner is pressing now. Thus, there is
no basis for holding that respondents' claims were an adequate
substitute for compliance by petitioner with the ITC's rules.
Against this background, it is clear that there is no conflict
between the court of appeals' decision and the decisions on which
petitioner relies (Pet. 8-9). In all of those cases, the objections
that the court of appeals was asked to review had been raised below
before the agency, either by a similarly situated party in a
rulemaking proceeding /6/ or by the same party in a prior proceeding
before the same agency. /7/ Those cases recognized the general
principle that a party may not obtain judicial review of issues that
an agency had no opportunity to consider. E.g., Local 512, Warehouse
& Office Workers' Union v. NLRB, 795 F.2d 705, 713-714 (9th Cir.
1986); Safir v. Kreps, 551 F.2d 447, 452 (D.C. Cir.), cert. denied,
434 U.S. 820 (1977) ("appellant is not free to raise points without
regard to whether they were argued at some stage of the administrative
process"). Moreover, in those cases, the party seeking review did not
initially defend the administrative ruling that it sought to challenge
in the reviewing court, as petitioner did here. Finally, none of the
cases on which petitioner relies involved an agency rule which, like
19 C.F.R. 210.54(a), requires each party to specify its particular
objections to an ALJ's ruling in order to avoid abandoning them. This
firm rule is an integral and important part of procedures the ITC has
adopted to assure the just and efficient disposition of Section 337
proceedings, which are conducted under strict time deadlines imposed
by Congress. /8/
2. The court of appeals' straightforward application of the ITC's
rule requiring each party to its proceedings to assert a timely and
specific objection to an ALJ's initial determination involves no
colorable violation of due process. Indeed, as this Court observed in
L.A. Tucker Truck Lines, 344 U.S. at 37, "orderly procedure and good
administration" depend on rules that assure that arguments will be
presented to an agency when they can be meaningfully considered and
determined. /9/
By refusing to hear an issue that petitioner abandoned in 1984, the
court of appeals did not deprive petitioner of its right to be heard
"at a meaningful time and in a meaningful manner." Mathews v.
Eldridge, 424 U.S. 319, 333 (1976). In 1984, when the ALJ clarified
the scope of petitioner's patent to save it from a determination of
invalidity, it was self-evident that this clarification would
determine what processes would, in the future, be determined to be
infringing and that efforts could be made to design around the patent
as clarified. Petitioner had no constitutional right to wait until
after those efforts had been made to seek a reinterpretation of the
scope of its patent. As this Court has observed, a patent claim is
not a "nose of wax" to be twisted one way to preserve a patent's
validity and another way to catch an alleged infringer. White v.
Dunbar, 119 U.S. 47, 51-52 (1886).
CONCLUSION
The petition for a writ of certiorari should be denied.
CHARLES FRIED
Solicitor General
LYN M. SCHLITT
General Counsel
JAMES A. TOUPIN
Assistant General Counsel
JEAN H. JACKSON
Attorney United States International Trade Commission
DECEMBER 1988
/1/ Section 337 prohibits unfair methods of competition and unfair
acts in the importation of articles into the United States, and
empowers the Commission to investigate alleged violations and to issue
exclusion orders. 19 U.S.C. 1337. The importation of goods
manufactured through processes covered by an American patent is among
the practices that this section prohibits. See 19 U.S.C. 1337a.
/2/ Under 35 U.S.C. 111-112, an application for a patent includes a
"specification." This specification must contain "a written
description of the invention, and of the manner and process of making
and using it, in * * * full, clear, concise, and exact terms * * *"
and must conclude with "one or more claims particularly pointing out
and distinctly claiming the subject matter which the applicant regards
as his invention" (35 U.S.C. 112 (emphasis added)). The scope of the
patent is determined by reference to the patent "claims," which must
be sufficiently definite to qualify for a patent. See Autogiro Co. of
America v. United States, 384 F.2d 391, 395-396 (Ct. Cl. 1967). The
invention described must be novel and nonobvious. 35 U.S.C. 102-103.
/3/ For instance, petitioner argued to the Commission (Pet. App.
A6):
(T)he ALJ has correctly found that "(t)he '257 claims are
construed as including the critical feature of the wide lips on
the nozzle."
/4/ Petitioner noticed an appeal from this order with respect to
two patents other than the '257 patent, but this appeal was dismissed
as untimely. Allied Corp. v. United States International Trade
Commission, 782 F.2d 982 (Fed. Cir. 1986).
/5/ As initially issued, the court's opinion spoke in terms of
waiver. See Pet. App. A16-A18. A subsequent modification of the
opinion reframed the court's holding in terms of abandonment. See id.
at A22. While the court of appeals did not explain the reasons for
this modification, it seems to have been designed to conform the
language of the opinion to the terms of the relevant ITC regulation,
19 C.F.R. 210.54(a)(2), which provides that issues which are not
properly raised "will be deemed abandoned."
/6/ Buckeye Cablevision, Inc. v. United States, 438 F.2d 948, 951
(6th Cir. 1971) ("identical issues" had previously been raised by
other parties); Center for Auto Safety v. Thomas, 806 F.2d 1071,
1075-1076 (1986), vacated, 810 F.2d 302 (1987) (per curiam) (en banc),
reinstated on reh'g, 847 F.2d 843 (1988) (per curiam) (en banc),
vacated, 856 F.2d 1557 (D.C. Cir. 1988) (per curiam) (en banc)
(permitting review only of issues raised by other parties and basing
result in substantial part on permissive terms of statute); Natural
Resources Defense Council, Inc. v. United States Environmental
Protection Agency, 824 F.2d 1146, 1150-1151 (D.C. Cir. 1987)
(permitting review of issues raised by others and actually considered
by agency).
/7/ Local 512, Warehouse & Office Workers' Union v. NLRB, 795 F.2d,
705, 713-714 (9th Cir. 1986) (reviewing objection that had been raised
in party's pleading, rejected by the ALJ, and argued to the agency on
review); Safir v. Kreps, 551 F.2d 447, 452-453 (D.C. Cir.), cert.
denied, 434 U.S. 820 (1977) (reviewing issues that party had raised
before the ALJ and also pressed in other proceedings).
/8/ In the Trade Act of 1974, Pub. L. No. 93-618, Section 341(a),
88 Stat. 2053, Congress amended Section 337 to require the Commission
to conclude an investigation into alleged unfair import practices "at
the earliest practicable time, but not later than one year (18 months
in more complicated cases)" after publishing notice of the
investigation. The Commission's rule requiring each party to specify
its objections to an ALJ's initial determination in an initial
petition for review helps the ITC meet these deadlines by ensuring
that the positions of all parties and the issues in dispute will be
set forth fully in the initial round of submissions to the Commission.
Indeed, in 1984, the Commission declined to amend 19 C.F.R. 210.54 to
allow a party which had prevailed in part before the ALJ to petition
for review on issues on which it did not prevail in a response to its
opponent's petition. The Commission explained that such a procedure
would necessitate affording the opponent an opportunity to file a
reply on issues first raised in a response, and that this additional
stage in the briefing process could deprive the Commission of adequate
time to review an ALJ's determinations. The Commission also noted
that each party should be able immediately to identify those issues on
which it disagrees with an ALJ's initial determination. 49 Fed. Reg.
46126 (1984).
The court of appeals was thus fully justified in construing the
Commission's rule to require each party to raise its own objections to
an ALJ's determinations. Moreover, since the ITC's decisions are
reviewable only in the Federal Circuit (19 U.S.C. 1337(c)), that
interpretation cannot be the subject of a conflict among the Circuits.
See Pet. 7 n.3.
/9/ This Court, for instance, ordinarily refuses to hear claims not
presented to and decided by the courts of appeals. Youakim v. Miller,
425 U.S. 231, 234 (1976).